Why should I take out federal student loans?
Federal student loans for a degree-seeking student are an investment in your future. You should not be afraid to take out federal student loans, but you should be smart about it. Federal student loans offer many benefits compared to other options you may consider when paying for college:
- The interest rate on federal student loans is almost always lower than that on private loans—and much lower than that on a credit card!
- You don’t need a credit check or a cosigner to get most federal student loans.
- You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time.
- If you demonstrate financial need and are enrolled in an undergraduate program, you can qualify to have the government pay your interest while you are in school.
- Federal student loans offer flexible repayment plans and options to postpone your loan payments if you’re having trouble making payments.
- If you work in certain jobs, you may be eligible to have a portion of your federal student loans forgiven if you meet certain conditions.
- You must be enrolled at least half-time.
The number of borrowers at UT Health San Antonio for the last three academic years are below (an average just over 53% for the three years shown):
- Academic year 2022 – 2,207 borrowers with total enrollment of 4,084 students
- Academic year 2021 – 2,149 borrowers with total enrollment of 4,058 students
- Academic year 2020 – 2,141 borrowers with total enrollment of 3,955 students
What should I consider when taking out federal student loans?
Before you take out a loan, it’s important to understand that a loan is a legal obligation that you will be responsible for repaying with interest. You may not have to begin repaying your federal student loans right away, but you don’t have to wait to understand your responsibilities as a borrower.
Be a responsible borrower.
- Keep track of how much you’re borrowing. Think about how the amount of your loans will affect your future finances, and how much you can afford to repay. Your student loan payments should be only a small percentage of your salary after you graduate, so it’s important not to borrow more than you need for your school-related expenses.
- Research starting salaries in your field. Ask your school for starting salaries of recent graduates in your field of study to get an idea of how much you are likely to earn after you graduate. You can use the U.S. Department of Labor’s Occupational Outlook Handbook to estimate salaries for different careers or research employment opportunities advertised in the area where you plan to live to get an idea of a local starting salary. You also can use the Department of Labor’s career search tool to research careers and view the average annual salary for each career.
- Understand the terms of your loan and keep copies of your loan documents. When you sign your promissory note, you are agreeing to repay the loan according to the terms of the note even if you don’t complete your education, can’t get a job after you complete the program, or you didn’t like the education you received.
- Make payments on time. You are required to make payments on time even if you don’t receive a bill, repayment notice, or a reminder. You must pay the full amount required by your repayment plan, as partial payments do not fulfill your obligation to repay your student loan on time.
- Keep in touch with your loan servicer. Notify your loan servicer when you graduate; withdraw from school; drop below half-time status; transfer to another school; or change your name, address, or Social Security number. You also should contact your servicer if you’re having trouble making your scheduled loan payments. Your servicer has several options available to help you keep your loan in good standing.
What types of student loans are available?
Direct Subsidized Loans
These are for undergraduate students with financial need. Your Free Application for Federal Student Aid (FAFSA) will be reviewed to determine the amount you can borrow. You are not charged interest while you’re in school at least half-time and during grace periods and deferment periods. The amounts you can receive are also based on your level in school. Please see www.studentloans.gov to view the annual and aggregate loan limits for undergraduates, graduates, and professional students.
Direct Unsubsidized Loans
You are not required to demonstrate financial need to receive a Direct Unsubsidized Loan. Like subsidized loans, your FAFSA will be reviewed to determine the amount you are eligible to receive. Interest accrues (accumulates) on an unsubsidized loan from the time it’s first disbursed. You can pay the interest while you are in school and during grace periods and deferment or forbearance periods, or you can allow it to accrue and be capitalized (that is, added to the principal amount of your loan). If you choose not to pay the interest as it accrues, this will increase the total amount you have to repay because you will be charged interest on a higher principal amount. The amounts you can receive are also based on your level in school. Please see www.studentloans.gov to view the annual and aggregate loan limits for undergraduates, graduates, and professional students.
Proration of Loans – We must prorate a Stafford Direct Loan for an undergraduate program if the academic program is shorter than an academic year or the student’s remaining period of study is shorter than an academic year. Proration is required only when it is known in advance that a student will be enrolled for a final period of study that is shorter than an academic year. Stafford Loan limits are not prorated for students enrolled in graduate or professional level programs.
Back to Loan Types
PLUS loans are federal loans that graduate or professional degree students and parents of dependent undergraduate students can use to help pay education expenses. The U.S. Department of Education makes Direct PLUS Loans to eligible borrowers through schools participating in the Direct Loan Program.
Here’s a quick overview of Direct PLUS Loans:
- The U.S. Department of Education is the lender.
- ·The borrower must not have an adverse credit history.
- Loans have a fixed interest rate. Click here for current rates.
- The maximum loan amount is the student’s cost of attendance (determined by the school) minus any other financial aid received.
Alternative Loan borrowing should be used for circumstances where you have exhausted all other options in regard to financing your education. These loans typically have high-interest rates and may have fees associated with them.
UT Health San Antonio requires students to apply for financial aid using the Free Application for Federal Student Aid (FAFSA) prior to seeking an Alternative loan option. We will not be able to certify a loan for you until we have received your FAFSA and any documents required in order for your account to be ready for packaging. We will offer the loan, for an amount that cannot exceed your Cost of Attendance less other aid received for the aid year, which must be accepted by the student via their student portal. Loans will be disbursed in at least two disbursements or based on the number of terms enrolled – whichever is greater.
College Access Loan Program
The College Access Loan Program provides alternative education loans to Texas students who are unable to meet the cost of attendance. The CAL may be used to cover part or all of the student’s Expected Family Contribution (EFC); students do not have to demonstrate financial need . However, the amount of federal aid for which you are eligible must be deducted from the cost of attendance in determining the CAL loan amount. You can find information about this loan program or apply for the loan at www.hhloans.com or continue reading below.
This loan program is part of the Hinson-Hazlewood College Student Loan Program administered by the Texas Higher Education Coordinating Board (THECB). You can track your application progress using their College Access Loan Application Guide.
- Be a Texas resident
- Be enrolled at least half-time in a course of study leading to an associate, bachelor, graduate or higher degree or be enrolled in an approved Alternative Educator Certification Program
- Meet the satisfactory academic progress requirements set by the institution
- Provide a cosigner who has good credit standing and meets other requirements
Annual Loan Amounts
- Students may borrow an amount up to the cost of attendance less other financial aid, including federal loans even if they are not accepted by the student
Cosigner Eligibility Requirements
- Must be at least 21 years of age
- Must have a regular source of income
- May not be the borrower or the spouse of the borrower
- Must receive a favorable credit evaluation
- Must be a U.S. citizen and reside in the U.S. or in a U.S. territory
Favorable Credit Evaluation Requirements
Students or cosigners must:
- Have an Experian VantageScore of 650 or higher;
- Not have public records such as tax liens or bankruptcy proceedings;
- Have a minimum of 5 credit trade lines, excluding student loans or authorized user accounts.
- Not have defaulted on any federal or private education loans.
In line with financial industry practice, THECB reports account obligations to the credit reporting agency(ies). The reporting is at the loan level, with each loan reported as a tradeline. Cosigners are equally responsible for the repayment of the loan if the student fails to meet his/her repayment obligation.
- Effective July 1, 2021 the interest rate for loans is 3.75%.
- Effective August 1, 2022 the interest rate for loans is 5.35%.
- Effective September 1, 2023 the interest rate for loans is 5.85%
- Interest is not capitalized.
- Loans have a six-month grace period from the date a borrower ceases to be continuously enrolled as at least a half-time student at an eligible institution;
- Principal balances under $30,000 have up to a ten-year repayment period with minimum monthly payments of $50;
- Principal balances of $30,000 or more have a repayment period up to 20 years;
- The loan will not be sold to another lender;
- Postponements of loan repayment and income-sensitive or graduated repayment schedules are available.
Minnie Stevens Piper Foundation (MSPF) Loan Program
The MSPF provides alternative education loans to Texas students who are unable to meet the cost of attendance. The loan may be used to cover part or all of the student’s Expected Family Contribution (EFC); Students do not have to demonstrate financial need however, the amount of federal aid for which you are eligible must be evaluated first before this loan can be offered. You can find information about this loan program or apply for the loan here (a brief summary of the loan program requirements is shown below for your convenience):
- Be a Texas resident
- US Citizen or Permanent Resident of the US
- Be enrolled full-time in a course of study leading to an associate, bachelor, graduate or higher degree
- Meet the satisfactory academic progress requirements set by the institution
- Provide a letter of recommendation from your department
ANNUAL/AGGREGATE LOAN AMOUNTS
- Undergraduate students may borrow up to $1,000 for the fall or spring semester (a separate application will be required for each loan).
- Graduate students may borrow up to $2,000 for the fall or spring semester (a separate loan application will be required for each loan).
- A maximum total of $10,000.00 may be loaned to any one student.
National Health Service Corps Loan Repayment Program
Primary care medical, dental and mental/behavioral health clinicians can get up to $50,000 to repay their health profession student loans in exchange for a two-year commitment to work at an approved NHSC site in a high-need, underserved area. The payment is free from Federal income tax and is made at the beginning of service so you can more quickly pay down your loans. Approved sites are located across the U.S., in both urban and rural areas. For more details click here.